A US judge has rejected Facebook’s proposed legal settlement to resolve allegations that the social networking company violated its members’ rights through the its ‘Sponsored Stories’ ad feature.
The lawsuit follows complaints that Facebook was using people’s photos in ads without their permission.
The feature took users’ photos and used their faces in Facebook’s in-site ads for brands after they had merely clicked the “thumbs-up” button and “Liked” the company.
The lawsuit seeks class-action status and was filed in the Northern District of California by five Facebook members on behalf of as many as 100 million users of the social networking site.
The settlement proposal calls for Facebook to change its Statement of Rights and Responsibilities (“SRRs”) and to implement certain additional mechanisms to give users greater information about, and control over, how their names and likenesses are employed in connection with sponsored stories, according to court documents.
Facebook was hoping to settle to claims by paying an offered $20m settlement. This would have accounted for a a payment of $10 million dollars to certain organizations involved in Internet privacy issues, and provides that the plaintiffs may apply for an award for attorney fees of up to $10 million, without objection by Facebook.
However, Judge Richard Seeborg has denied a motion for preliminary approval of the proposal, and implied that the settlement money offered by Facebook was ‘plucked from thin air’.
Seeborg has listed several concerns with the proposed settlement, including a request for more information on why the agreement does not award any money to members.
Seeborg said the company and attorneys for the plaintiffs could try to modify their agreement to address his concerns.
“In this instance there are sufficient questions regarding the proposed settlement that it would not be appropriate simply to grant the motion and postpone resolution of those issues to final approval,” Seeborg wrote.
“We continue to believe the settlement is fair, reasonable, and adequate,” a Facebook spokesman said in a statement. “We appreciate the court’s guidance and look forward to addressing the questions raised in the order.”
The social network had been expected to pay out around $20m and make amendments to sponsored stories, which arrived in Facebook in December 2011.
In June, Facebook indicated it would hand over more control to its users with sponsored stories, after the initial complains were made.
Read the judge’s ruling in full here
